The firm operates the Digital Asset Index Fund in partnership with Bitwise Asset Management, which offers high net-worth investors exposure to the top cryptocurrencies by market value, which include Bitcoin, Ripple, Ethereum, Stellar and Bitcoin Cash, the top five digital assets according to CoinMarketCap.
The firm calls the challenge to Warren Buffett’s 2007 decision, nicknamed the Buffett Bet 2.0, to bet $1 million that the S&P 500 would perform better than a group of hedge funds managed by Protégé Partners. Buffett would later win the bet and donated the proceeds to charity.
Morgan Creek is calling on any investor who believes the S&P 500 would produce more returns than their crypto investments over a ten-year period.
Morgan Creek co-founder and partner Anthony Pompliano said whoever ends up on the other side of the bet has to be either someone bullish on the index fund or someone who believes cryptocurrencies are overvalued.
“This is a combination of our outlook not only for the upside of cryptocurrencies but also the outlook on public equities,” Pompliano explained to CNBC.
Pompliano took a stab at the public equity market, highlighting the recent losses in Diamondback Energy, based in Texas, as well as other investor favorites including Facebook, which is suffering a per annum loss of 24 percent.
“A lot of people might look at this and just think we’re bullish on crypto — but you need to look at what asset we’re going up against. Public equities aren’t exactly at their all-time highs either,” Pompliano argued.
The wager is being made with personal funds from Pompliano and fellow partners at the firm with no money coming from the business. However, no one has yet decided to take up the other side of the bet.
Pompliano told CNBC’s Squawk Box last month that Bitcoin will level out following a 85% reduction before it surges once again to an all-time high and sees the recent crash only as a correction expected for a market overvalued last December.
“Bitcoin was overvalued in December ‘17. There are more sellers than buyers this year. So the price goes down. But there are three things you gotta remember. The first is, this is a transaction settlement layer. It’s the most secure in the world. It’s got to be worth something. It can’t be worth zero. The second is it’s the best performing asset class in the last ten years. It’s outperformed S&P, Dow, Nasdaq, et cetera, during the longest bull run.”
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